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Pakistans tax system has become increasingly unequal during the first two years of its International Monetary Fund (IMF) programme, with salaried employees facing a growing tax burden while influential sectors, including retail, agriculture and real estate, continue to contribute relatively little, as reported by The Express Tribune.
According to the newspaper, speaking at the opening of a two-day tax conference, IMF Regional Director Jihad Azour called for a fairer and more neutral tax structure to improve compliance, strengthen public trust and encourage business expansion. A fairer tax system can encourage compliance, Azour stated, emphasising the need to broaden the tax base, improve revenue administration, reduce tax exemptions and protect essential public spending. However, the recommendations contrast with Pakistans existing tax collection patterns. According to Federal Board of Revenue (FBR) data, income tax collection from real estate fell 38 per cent to Rs 35.2 billion during the first quarter of the current fiscal year. The decline followed a 50 per cent reduction in income tax rates for the sector, a move supported by the IMF. Real estate income tax revenue stood at Rs 200 billion in fiscal year 2024 and rose to Rs 236 billion last year, but could fall below Rs 150 billion following the rate cuts. Tax collection from agriculture has also remained limited. The Punjab and Sindh provinces together collected Rs 5.1 billion in agricultural income tax by June under the new regime introduced as part of the IMF programme. Meanwhile, the salaried classs annual income tax contribution surged from Rs 391 billion before the programme to Rs 629 billion by June 2026, as cited by The Express Tribune. The governments trader tax scheme has also struggled to expand its coverage. Despite an annual target of one million new registrations, only 137 retailers had joined by October 15. The scheme allows cash transactions, raising concerns that it could reinforce informality instead of improving compliance, the newspaper reported. (ANI)
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